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Joining old and new in Canada’s Highway 407

First publishedin ITS International
May June 2016
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Tolling 407ETR extra lanes added
When traffic volume on the 407ETR exceed certain thresholds, the concessionaire has to add extra lanes. (Pic Rick Radell)

David Arminas visits Canada’s Highway 407 ETR to see how the concession is working and hear about new arrangements for the roadway’s extension.

The Toronto region is North America’s eighth largest metropolitan area and its roads become notoriously congested. In 1997 Highway 407, a 68km concrete toll motorway which skirts the northern edge of Toronto, was opened and initially operated by the province and CHIC - a consortium of four leading Ontario-based companies.

Finance came from the Ontario Financing Authority through direct provincial borrowing and was to be paid by user tolls lasting 35 years, after which the road would become toll-free.

However, in April 1999 the provincial government announced the ‘privatisation’ of Highway 407. A consortium led by Spanish firm Cintra along with the Canada Pension Plan Investment Board and Canadian company SNC-Lavalin, paid CAD$3.1bn (around US$2.2bn at the time) for a 99-year operating concession with full control over the highway and its tolls.

Kevin Sack, vice president of marketing and government relations for the consortium says a lengthy lease was needed to generate international interest and Ontario’s taxpayers immediately received CAD$3.1bn – double the province’s investment.

Under the agreement, 39km of extensions (24km to the west and 15km to the east) were to be built immediately at the consortium’s expense to form the current 108km-long tolled highway. “That was done ahead of time and under budget by 2001,” explains Sack.
That extra money appears well spent as, according to Sack, the average trip is now nearly 21km - up from 11km before the extensions were added.

Critics saw the 99-year lease to a global consortium as the privatisation of a strategic infrastructure asset that should remain under public control, and some drivers were unhappy about paying the tolls - especially those set by the private operating company. But figures from the Annual Information Form show that the sceptics have been won over as the average number of workday trips have increased from 237,000 in 1999 to almost 400,000 by the end of 2015.

To cope with these increases the highway has been widened - adding another 220 lane-km at a cost of about CAD$16bn ($12.5bn) - and as traffic volume thresholds are met, a contractual requirement kicks in to widen the highway.

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Control room at headquarters.
Control room at headquarters.

Beyond offering congestion-free motoring (the company did not incur a congestion payment in 2015), the consortium wants the 407 ETR to make economic sense for drivers - especially regular users with transponders in their vehicles. A transponder costs CAD$21.50 ($17.50) per year compared with a CAD$3.95 ($3) camera charge each time a driver without a transponder passes under a gantry.

“For drivers making more than six trips a year it makes financial sense to get a transponder,” Sack says, adding: “For us it’s about increased accuracy and more accurate billing. Drivers drop into the 407 ETR office and we’ve distributed them everywhere… but around 90% are [purchased] online and we ship it out within five to seven days.”

This approach appears to be working as the number of transponders in circulation rose 6.1% to 1,275,900 last year and were used for almost 83% of total trips (up 1% from 2014). There was a record 121.3 million trips in 2015 (up 2.6%) and total vehicle-kilometres travelled was 3.3% higher at 2,517 million - due to economic growth and lower fuel prices as well as congestion and construction activities on alternate routes. Revenue recorded on the Form has passed the CAD$1bn ($0.78bn) mark for the first time.

There is a move to end inefficient paper-billing by mail and introduce direct debit payment, explains Sack. “We have 1.1 million paper bills, down from two million through consolidating bills to a household and users moving to internet billing.”

Asked about overdue accounts Sack says: “We are not in the business of collecting interest and fees on bills, so we really push pre-authorise payment. We’ll say to people, pre-authorise your payments and we’ll give you 50km free on the highway.”

Between 4% and 5% of users receiving a bill will contact the Call Centre and more than 625,000 calls are handled annually.

For drivers who refuse to pay, ETR can use the ‘plate denial’ route by notifying the Ontario government’s Registrar of Motor Vehicles that the driver owes it money. When that driver tries to renew their car’s licence plates, they will be refused until the outstanding account is settled.

Unpaid bills, along with emergency, police, military and diplomatic vehicles, vehicles with unreadable licence plates and 407 ETR staff are known as ‘unbillables’. In 2000 around 8.2% of all trips on the 407 ETR were unbillable but this has been reduced to 1.45%. Last year 407 ETR took delivery of new transponders from Kapsch TraffiCom, and OSI Optoelectronics is the primary supplier of the laser scanner vehicle detection units, mounted on the highway’s gantries.

“There’s an upstream gantry and a downstream gantry, explains Steve Spencer, marketing director for 407 ETR. “A laser curtain is projected down onto the roadway by the vehicle detector and classifier system - think of it as a vehicle driving through a waterfall. The laser perfectly maps the outline of a vehicle and even if a vehicle is swerving all over the place, we can follow it.”

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Night time gantry maintenance
Night time gantry maintenance.

Roadside equipment cabinets, custom designed by 407 ETR, are climate controlled to cope with temperatures ranging from more than 30°C to -30°C and a monitoring unit in the cabinet alerts the office to any error or system failure on the gantry. And even small innovations can save thousands of dollars.  “Some of our cameras have tiny LED lights in the case which provide enough heat to stop lenses fogging up in extreme cold and we have a fully functioning gantry at the head office to test equipment before deployment,” says Spencer.

In 2012, 407 ETR introduced Seeker vehicle tracking system technology to an initial six tolling sites and by the end of last year 130 of 198 single, two and three-lane sites had been upgraded. A long-term camera upgrade program is also in progress.

Cameras are mainly a back-up as if no transponder is detected two cameras take pictures to ensure at least one full image of the vehicle and plate – but according to Spencer they can be used in other ways too. “We may decide to take transponder and plate images of all heavy goods vehicles for instance. We would do this if we suspected someone has been fiddling around with their transponder.”

Any unclear images are put through to a Video Exception Processing Unit for human verification.

“But over 80% of our information is read automatically in the camera. It’s a small number that goes over to manual processing. And if we can read five or six digits, we can search the database for similar plates, pull up those images and see the make and model of vehicle to see if it matches the mystery one, and then successfully bill that customer,” Spencer adds.

407 East

In May 2012 an extension to the 407 toll road was announced called the Highway 407 East Project. But this time Ontario will own and control the new electronically-tolled Highway 407, which includes Highway 412, including setting toll rates and receiving toll revenue.
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Canada's Highway 407
Canada's Highway 407 is being extended under different terms to the original concession. (Pic Rick Radell)
A spokesperson for the Ontario Ministry of Transportation said “important lessons” have been learned, the foremost of which is that the province needs to retain public ownership of the tolled highway and the operating contract must be significantly less than 99 years. The government said it has become apparent that toll rates must be regulated by the province and not be at the discretion of the toll concessionaire (albeit with criteria that allows for toll rises) and that customer service expectations must be set out from the start.

Infrastructure Ontario and the Ministry of Transportation also announced that the 407 East Development Group (407 EDG) as the consortium to design, build, finance and maintain Highway 407 East Phase 1 Project - around 148 lane kilometres in four to six lanes. There will be up to 11 interchanges including two highway-to-highway interchanges, 31 major water-crossing structures and 16 road crossings.

This March, Blackbird Infrastructure 407 General Partnership signed a fixed-priced contract to design, build, finance and maintain the Phase 2 Project of Highway 407 East. Phase one will open this year with phase two set for opening in 2020. However, 407 ETR will run the tolling operation for both phases of 407 East. Drivers will use the same transponder (and receive a single detailed bill covering both toll roads) and there will be a common user website and telephone service number.

The question, soon to be answered, is: will users see the join?

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